When you deposit your money in a fixed deposit (FD) instrument, you get a higher rate of interest as compared to keeping it in a savings account. However, at the time of filing tax returns, you may come across a question as to the deduction of tax at source on your Fixed Deposit. Here are the rules about TDS.
Interest up to INR 5,000: If the interest earned on your FDs is less than or equal to INR 5,000 during one financial year, then the bank does not deduct any TDS. This is a great way to earn and save more when you invest in a tax-saving FD.
Interest above INR 5,000: If the interest income exceeds this limit during one financial year, then 10% TDS will be deducted.
No PAN details: If you do not share your PAN details with your bank, then they will deduct TDS at 20%.
On all interest earned: If you are a non-resident Indian, then the tax deduction at source on your FD interest is done at 30%, along with the applicable cess and surcharge. This is also the case with those NRI customers who have not shared their PAN details.
When you invest in a tax-saving FD as an Indian customer and your total income is Nil during a financial year, you have the chance to get a TDS waiver. You may do this by submitting Form 15G/15H to your bank at the beginning of the financial year.
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Best way for Long Term Investment into Fixed Deposits
- For Indian customers
Interest up to INR 5,000: If the interest earned on your FDs is less than or equal to INR 5,000 during one financial year, then the bank does not deduct any TDS. This is a great way to earn and save more when you invest in a tax-saving FD.
Interest above INR 5,000: If the interest income exceeds this limit during one financial year, then 10% TDS will be deducted.
No PAN details: If you do not share your PAN details with your bank, then they will deduct TDS at 20%.
- For NRI customers
On all interest earned: If you are a non-resident Indian, then the tax deduction at source on your FD interest is done at 30%, along with the applicable cess and surcharge. This is also the case with those NRI customers who have not shared their PAN details.
When you invest in a tax-saving FD as an Indian customer and your total income is Nil during a financial year, you have the chance to get a TDS waiver. You may do this by submitting Form 15G/15H to your bank at the beginning of the financial year.
Read More:
Best way for Long Term Investment into Fixed Deposits
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